Stocks & Mutual Funds

Mutual Funds 101: What Are Mutual Funds And How Do They Work?

2007-09-07T09:07:00.000-07:00

With fewer and fewer employers offering pensions and other retirement savings options, more and more American workers are turning to Mutual Funds to save for the future.

What is a mutual fund? It is a company that pools money from many investors and invests it in a variety of options including stocks, bonds, short-term money markets and other securities. The fund’s portfolio (or listing of its investment funds), shows how diversified its investments are. These funds are handled by a professional money manager as one account. Individual investors have little (if any) say as to the types of assets purchased for the fund’s portfolio.

Letting someone else handle all trades can be difficult for many seasoned investors to handle, but most uneducated investors love the idea of giving a team of professionals sole buying power. The advantage of being involved in a large-scale mutual fund is the ability to diversify their holdings - a safer investment for all.

There are some disadvantages though to this type of account. They include:

·Cost. Investors are required to pay sales charges, annual fees and other expenses on mutual funds regardless of how well (or poorly) the fund performs.·Price Uncertainty. When you purchase an individual stock you can check to see how well it’s doing as many times a day as you wish. This is not the case with mutual funds, which are only required to calculate their NAV once every 24 hours.

There are three main types of mutual fund categories - money market funds, bond or fixed income funds, and stock (equity) funds. Each offers its own risks and rewards.

Money MarketsRelatively low-risk, money market funds are, by law, only allowed to invest in high-quality short-term investments issued by the U.S. government. Inflation can be a concern, however, since rising inflation rates can quickly erode money market investment returns.Bond

Funds - Bond funds generally produce higher yields, thus contain more risk.Stock FundsThe best option for long-term investing, stock funds are extremely volatile on short term basis with drastic ups and downs depending on market trends.

Mutual funds are a growing investment strategy for many small scale investors saving for their retirement. The key is to find a fund that offers a diversified portfolio that offers a comfortable risk level for your investment style.

By: Bob Freeman

Article Directory: http://www.articledashboard.com
For the past ten years Bob Freeman has been helping people build more money in their retirements. Now he has taken his successful strategies to a new level by offering teleseminar courses to help people make a better retirement for themselves than they ever thought possible. For more tips and strategies see www.retirementwealthforyou.com or click here.

Buy Bonds for Safety More Investment Myths Exposed

2007-08-11T09:53:00.000-07:00

By: Graham Dyer
For many investors, there are only two assets worth considering most of the time - stocks or bonds. "When the stock market falters, switch to bonds for 'safety.' They might be dull and boring, compared to the roller-coaster ride shares can give you, but you can't lose on US Government Bonds, because apart from less volatility, you have the strongest guarantee in the world." So goes the argument.

Is this true? Are Uncle Sam's Treasuries safe? Well, if you don?t mind lending your hard-earned savings to someone who already owes $9 trillion and has no chance of ever paying it back, I guess you could say they are safe.
Bonds are only safe because people (including international investors, even central banks) think they are safe. When it comes time for Uncle Sam to repay his loans, he simply borrows some more (issues new bonds), often from the same people. The lemmings love them. If that?s not a gigantic Ponzi scheme, what is? If you or I tried it, we?d be behind bars! But the scheme survives because people believe in it, as they do the fractional reserve banking system..

Just like money in the bank, technically bonds are a very unsafe investment. But whilst ever the public maintains confidence in the confidence trick that both represent, you should not lose too much.

But this brings up the main factor to consider when buying bonds. Creditworthiness is one thing.

But the market risk is of even greater concern. And whatever I have to say about Treasuries here is doubled, tripled, quadrupled and more when it comes to junk bonds (lower than investment grade).

Investing is so easy. You only have to remember one rule: Buy when prices are low; Sell when prices are high. It?s that simple. Yet it is human nature to do the opposite. When an asset has been on the bottom for years, nobody wants to touch it. Once it has doubled in price, everybody wants to buy it. Crazy, huh? But that?s why a study of crowd behavior (socionomics and Elliott Wave patterns) is far more important than a study of economic fundamentals.
So, where are bonds now? Like stocks, they are near record high levels (interest rates near record low levels). So what should you be doing ? buying or selling? I told you it was simple.

The last time I recommended buying bonds was in 1989, when the yield on the Australian 10-year was 14%. It has since been below 5% and is still below 6%.
Today if you buy 30-year US bonds, you are locking in less then 5% per annum for 30 years. In 1981 you could have locked in 15% per annum. And you could have sold them along the way for a huge capital profit. Yet today they are infinitely more popular than they were in 1981, when bonds were a dirty word. That?s human nature.
?The 13 ? percent bond due in 2014 that the government sold on May 15, 1984, returned an annualized 24 percent. The S&P 500 returned 13 percent, including dividends, during the same period.? Courtesy Bloomberg

Clearly the most important thing is not so much what you buy and sell but when you buy and sell.
The junk bond market is a disaster waiting to happen. With investors desperate to get a better yield, they have been prepared to ignore risk, with the result that the spread between government paper and junk is near a record low. Investors are clamoring for junk yet it is clearly the worst possible time to be doing so. Along with private equity and hedge funds, associated junk bonds are going to be the greatest disaster since the dotcom crash (unless the housing crunch beats it to the punch).

But with countries like China and Japan owning hundreds of billions of dollars worth of US Government paper, is there no risk that panic selling could break out at any time even in the ?quality? market, causing a collapse in bond prices and a corresponding escalation in long term interest rates around the world? A persistent inverse yield curve has been warning of trouble ahead for many months. Does the fact that this has been ignored mean that the trouble will not occur?

The expression "flight to safety," when used in reference to bonds, may really mean "out of the frying pan into the fire."
The Graham Dyer Newsletter has not missed a month's publication since July 1983. His track record for forecasting is the envy of many, including the 1987 stock market crash, the demise of the Japanese economy and stock and real estate markets in the 1990s, the bull market for bonds from 1989, and the real estate boom this decade. His book is entitled: "How to Profit from the Coming Great Depression." If you want to know the pitfalls of investing as well as the opportunities, Graham Dyer?s world class work is a must read. For more of Graham's work you can visit his Blog at grahamdyer.com/blog

5 Tips To Make Money In Trading Stocks Online

2007-06-08T01:50:00.000-07:00

By: J Lloyd

The discovery of internet has made the methods of doing businesses very easy and comfortable. It has also taken the market of stock to the heights as the large percentage of population has opted the method of trading stock online.
Tools To Start Trading Stocks Online
The method of trading stock online has been proved as the most convenient and successful method of trading stock. It is also very easy for anyone to start trading stock online by just possessing 3 important tools which are:

1 - Computer: If the whole procedure of trading has to be done online, then it is obvious that the main foundation of this trade is the computer. If anyone wants to start with online stock trading then he should possess a fast computer with Windows XP as its operating system.

2 - Internet: It is the major component of online trading as it will connect you to the various companies of the stock market. It is always suggested to go for a high speed cabloe or broadband internet connection.
It is always recommended to have an internet back up even if you possess a good net connection as there are the chances for the net to get down. You should always possess an access to a telephone line if, in any case, your system gets disrupted and you want to exit the trade then by using telephone you can inform the broker regarding the same.

3 - Brokers: In order to enjoy the excitement of trading stock online, one has to require a broker through whom you will be involved in online trading. There are many online brokerage firms possessing different fees and offering different services. You should always opt for the online broker that proffers good stock trading and charting software. You should always select that online brokerage firm which offers market data and the updated information to all its clients.

Before going to have the tools for online stock trading, you should jot down the things which will be required by you from each and every tool.

Tips To Make Money In Trading Stocks Online
There are many people who have been successful in making out huge amounts from the online stock trading. The following 5 tips will really help the online traders to make out dollars from online stock trading.

1 - Chart reading in stock trading is the most beneficial step for the traders to trade efficiently. By becoming skillful in the activity of reading charts, you can easily judge out the stocks that will move up.

2 - It should be habitual to set stop loss orders whenever you make trade else your entire account will get smashed. You should always proceed in the game by scraping down your losers early and by allowing the winner to continue. Basically, this is one of the tactics of the trade.

3 - You should never purchase the stock which is dropping down with a perception that it will increase suddenly after you will purchase it. You should always opt for the stock that is constantly moving up and will keep on touching the heights. Therefore, you should get rid of a myth "buy low and sell high" from your mind.

4 - You should never give an importance to the media personalities rather it is recommended to work independently while trading online. This is so because there are frequent ups and downs in the stock market and by the time information of the media persons reaches you, it becomes too late. Therefore, it is always recommended that you should always work with your brain instead of trading by using someone else?s brain.

5 - You should always search for the brokers whose commission share should be low else your profits will be spent in paying the commission to the brokers.

These five tips will really help everyone to hitting the jackpot while trading stock online.
For more online stocks information please visit http://www.aboutonlinestocks.com - a popular online stocks website that provides tips and online stock resources. Don't forget to check out our page on trading stocks online.